Pharma earnings up, but pipelines weak

Big Pharma, biotech earnings stronger-than-expected for the most part, but analysts want more innovation, acquisitions.

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By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- U.S.-based drugmakers and biotechs have made a stronger-than-expected showing for the fourth quarter so far, as global sales got a boost from the weak dollar.

But going forward, there isn't much to get excited about, as pipelines have been relatively weak, said Miller Tabak analyst Les Funtleyder.

"There's nothing innovative going on this quarter," said Funtleyder. "It's hard to get investors enthusiastic when they don't see growth drivers."

Pfizer and Johnson & Johnson, the two biggest drug companies in terms of annual sales, and Abbott Laboratories, all beat analysts' forecasts for earnings and sales. All three cited the weak U.S. dollar as a key factor in driving companywide performance.

Pfizer (PFE, Fortune 500), based in New York, was the only one to report a decline in sales and earnings. This stemmed from the drugmaker's sale in 2006 of its consumer health unit to Johnson & Johnson.

Despite earnings that beat the street, sales rose just 4 percent in the fourth quarter. Barbara Ryan, analyst for Deutsche Bank North America, said that cost-cutting and "strong financial management" could continue to drive Pfizer earnings over the next few years. But the pharma giant isn't likely to get a big boost in earnings and sales unless it makes strategic acquisitions that reduce dependence on its declining cholesterol-cutting blockbuster Lipitor.

New Brunswick, N.J.-based Johnson & Johnson (JNJ, Fortune 500), which makes drugs, consumer products and medical devices reported that net income jumped 7 percent in the fourth quarter to $2.5 billion, or 88 cents a share, without charges. Sales climbed 17 percent to $16 billion for the quarter, said J&J. This beat analyst projections of 86 cents earnings per share and sales of $15.4 billion.

Abbott (ABT, Fortune 500), a maker of drugs and medical devices based in the Chicago area, reported that net income without charges surged 26 percent in the fourth quarter to $1.45 billion, or 93 cents per share. Sales climbed 16 percent to $7.2 billion. These exceeded analyst estimates of 92 cents per share without charges and $7 billion for sales.

As for biotechs, results from leading companies Amgen, Genentech and Gilead were mixed. Amgen was the only one of these companies that managed to beat analysts' fourth-quarter forecasts.

Amgen (AMGN, Fortune 500) said that sales slipped 2 percent in the fourth quarter to $3.7 billion, while analysts had projected an 8 percent drop to $3.5 billion. The company, based in Thousand Oaks, Calif., said that adjusted net profit edged up 3 percent to nearly $1.1 billion, or $1 per share, compared to the analyst forecast of 97 cents per share.

Amgen's stock rose 5 percent Friday, the day after it reported results. Funtleyder said investors may have realized they've been too bullish the company's anti-anemia drugs Aranesp and Epogen, which have gotten tougher warning labels from the Food and Drug Administration because of health concerns. This has also affected Johnson & Johnson's Procrit, which is a member of the same drug class.

Genentech (DNA) reported a 12 percent jump in net profit without charges to more than $700 million, or 69 cents per share. The biotech, based in South San Francisco, Calif., said sales went up 7 percent to $2.2 billion for the quarter. Sales were in line with analysts' expectations, but the company beat the earnings-per-share forecast of 67 cents.

Gilead Sciences (GILD), a biotech based in Foster City, Calif., said net profit rose to more than $400 million, or 44 cents per share, in the fourth quarter of 2007. This is compared with a loss during the same period in 2006, because of its purchase of Myogen.

Gilead's sales were driven by its fast-growing HIV drugs, jumping 22 percent in the quarter to $1.1 billion. To top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.